The beleaguered tax credits system, originally supplied by EDS in 2003, is once more under fire. The Parliamentary Ombudsman says the system is inflexible, does not provide an immediate, responsive and appropriate service, and that the £2bn of overpayments it has authorised should be written off (Computing, 23 June).

These are issues of process rather than technology failure, but still present considerable implications for government IT as a whole.

When the system went live in April 2003 there were substantial problems with the technology: slow-running systems caused massive backlogs, and miscalculations resulted in overpayments to the tune of £94m in the spring of 2003 alone.

But, as the Ombudsman's comments imply, while IT failures may have exacerbated the problems, the design was fundamentally flawed from the start. And the government is keen to stress there are no longer problems with the technology.

Tax credits is not a classic government IT disaster, it is a classic government information systems disaster, says Philip Virgo, strategic adviser to user group the Institute for the Management of Information Systems.

'It is nearly always systems design that is the problem, and very often in government projects the system is doomed before it even gets to the procurement because the idea has not been subjected to systematic thinking about the objectives, how it will work, how human beings will interact with it, and so on,' he says.

The current problems stem from changes to the focus of computer science education, says Virgo.

'Twenty years ago we stopped teaching people classical systems analysis, and everyone focused on technology,' he says. 'So we have a generation of people who think it is all about technology.'

The public sector is unique because the government has a dual role, says Nick Kalisperas, director of public sector at supplier trade body Intellect.

'The government is both the customer and the policymaker - and sometimes the two go out of alignment. There needs to be better co-ordination between the two roles and an early engagement between government and its suppliers,' he says.

The government's much-vaunted emphasis on citizen-centric services needs to filter through to the design of systems, says Eric Woods, government practice director at analyst Ovum.

'Departments need to be much more aware of how the client group will use the system, and that needs to be given due consideration in the design,' he says.

Some aspects of government IT have improved, particularly on the project management side, but there are still serious issues to be addressed, says Woods. 'It is one thing to have identified the lessons, and quite another to instill them into future projects,' he says.

'There still needs to be a broader consideration of how policy decisions and IT join together.

EDS and HMRC: will they end up in court?

The discussions between HM Revenue and Customs (HMRC) and tax credits supplier EDS over who is to blame for what, and, more importantly, who should be compensated, have been ongoing since the problems surfaced in 2003.

Both parties say they hope to settle amicably, but recourse to the law has not yet been entirely ruled out.

Experts agree a court case is extremely unlikely - not least because of the prospect of Chancellor Gordon Brown or paymaster general Dawn Primarolo being called to the witness box.

It is in neither organisation's interest to go to court, says Eric Woods, government practice director at analyst Ovum.

'If the dispute went to court it will make suppliers more cautious about the level of risk they take on with the government, which is already an issue,' he says.

Nick Kalisperas, director of public sector for supplier trade body Intellect, says: 'A court case would send out all the wrong signals - delivering IT is all about partnerships.'